The firm said it initiated coverage on the auction house based on a 25% increase in consolidated auction sales through May.
Goldman Sachs added that the company's valuation is at risk from global economic stability, expense leverage, China, and industry competition.
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Shares of Sotheby's are lower by -1.33% to $173.80 in pre-market trading today.
Separately, TheStreet Ratings team rates SOTHEBY'S as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SOTHEBY'S (BID) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and notable return on equity. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BID's very impressive revenue growth greatly exceeded the industry average of 2.4%. Since the same quarter one year prior, revenues leaped by 54.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SOTHEBY'S reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SOTHEBY'S increased its bottom line by earning $1.86 versus $1.56 in the prior year. This year, the market expects an improvement in earnings ($2.23 versus $1.86).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Diversified Consumer Services industry average, but is greater than that of the S&P 500. The net income increased by 72.6% when compared to the same quarter one year prior, rising from -$22.35 million to -$6.11 million.
- Net operating cash flow has significantly decreased to -$268.13 million or 61.44% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: BID Ratings Report